Public Water Now organization looks for buyout of Cal Am

A new organization is taking aim at a buyout of California American Water's Monterey district system.

Public Water Now formally announced this week it would sponsor a ballot initiative seeking voter approval to purchase Cal Am's local assets. It would appear on the June 2014 ballot.

Ron Cohen, president of Public Water Now, said the organization was just beginning the process of qualifying the initiative. It would require the Monterey Peninsula Water Management District to purchase Cal Am's local assets, including through the use of eminent domain if necessary.

Cohen, who lives in Pebble Beach, said a draft petition has been created and the organization was seeking to hire an attorney to offer advice about how to proceed. He said a signature-gathering effort would likely begin by early July and would seek to collect 6,500 signatures by November, enough to qualify the initiative for the ballot with a 10 percent margin.

While the organization includes members and participants from other groups pushing public ownership of the Monterey Peninsula water supply — such as WaterPlus, Citizens for Public Water and Ratepayers First — Cohen said the new group will maintain a sharper focus on purchase of the local water system.

"We are only focused on a Cal Am purchase and no other issues," he said, adding other groups have become involved in other issues, such as participating in the state Public Utilities Commission review of Cal Am's proposed Peninsula water supply project, supporting alternative projects or debating growth.

"I'm insisting all other issues, other than purchasing Cal Am, be checked at the door," he said. "When it comes to the water issues, there's been far too much conversation."

On Thursday, Cohen argued Cal Am has essentially forced a public purchase of the local system by mismanaging the quest for a new water supply for the Peninsula, needed because of a state order to cut back on pumping from the Carmel River, and raising the spectre of doubling or even tripling water bills in the near future.

Cohen, who wrote a commentary in The Herald last week arguing for a public purchase, said a new financial feasibility study indicates Peninsula residents could afford to buy out Cal Am's local system simply by eliminating the company's profit — which he estimated would triple by 2018 if it remained the Peninsula's sole water provider — taxes and PUC fees.

Cohen said the study estimated savings from cutting out Cal Am at about $340 million and suggested Cal Am's local system could be bought for up to 1.5 times its $125 million book value, or about $187.5 million, though he called that a "high-end offer."

Cal Am spokeswoman Catherine Bowie cautioned that a "public takeover" would result in a "lengthy and expensive eminent domain proceeding that would distract from the real task at hand: constructing a new water supply project to avoid the state water cutbacks."

"At this time, our community needs to be united and focused on developing the solution to our water issues," Bowie said. "It's important to understand that condemnation requires we be paid fair market value for all of our assets. The reality of this proposition is that tremendous additional costs would be imposed upon the public in addition to the cost of developing a new water supply, which will be needed no matter who owns the system.

"In case after case, public takeover proponents offer initial estimates of the cost to purchase a water system that turn out to be a fraction of the actual cost. It's important the Monterey Peninsula show state regulators that we are working together to solve the water problem."

But Cohen said it is past time for Cal Am to be replaced, saying it would likely be too late to buy the company after the Peninsula water project is completed because the company would be far more valuable. He suggested the company is not likely to be capable of bringing the project to a successful conclusion.

"This is the third try," he said. "If I was a baseball manager, I would have pulled the pitcher by now. People have to make a decision: Are they going to have more of the same, or make a change?"

In contrast, Cohen praised Dave Stoldt, general manager of the water management district, as one of the best in the state and argued he would be a more efficient manager of the Peninsula water supply than Cal Am.

Cohen said Public Water Now has about 15 members, including some who are well-known in local water politics, like George Riley, Harvey Billig, Doug Wilhelm and Dale Heckhuis. He said the organization has about $10,000 and is just starting its fundraising efforts, along with seeking nonprofit status as a 501(c)4 organization.

WaterPlus president Ron Weitzman said his organization would work independently to supplement Public Water Now efforts, including a reorganization of the water management district, and urged support of the public purchase bid.